Rivers of ink have been spilled over how to help DC members to save more, invest better and gain more knowledge. We have applied behavioural economics, calculated the effect of high fees on cumulative savings, taken advantage of the latest research on heuristics and employed the best consulting talent—all to ensure that the accumulated savings will prove adequate in achieving DB-like replacement ratios.
The decisions we ask employees to make at retirement are both complex and consequential. In many cases, there’s no going back. Whether you’re a DC member choosing an annuity or a DB member choosing a pension payment option, the decision is significant and irreversible. So, what role should plan sponsors play in equipping members to make these critical decisions?
As it turns out, everyone. Managing asset de-accumulation risk in capital accumulation plans was the hot topic of a recent ACPM breakfast, with presentations from Paul Partridge, director, investments marketing, with Manulife Financial and Robert Klosa, director, product development at GRS market development, with Sun Life Financial.
Since the early 1990s, when pension plan sponsors began in earnest to convert their DB plans to DC, Canada has seen a sustained shift in the pension landscape. Between 1991 and 2006, according to Statistics Canada, the number of members covered by employer-sponsored DB plans shrunk by 4%, while DC membership grew by 93%.
As DC pension plans become more prevalent in Canada, DC sponsors have been focusing primarily on the accumulation and management of assets for active plan members. However, with more DC members approaching retirement, sponsors also need to focus on how the assets accumulated in DC plans will be paid out to beneficiaries and what legal complications can arise.
To help their plan members prepare for retirement, DC plan sponsors need to complete the accumulation-to-de-accumulation cycle Retirement security for Canadians is clearly one of today’s big issues. It’s a hot topic for pundits and politicians. It’s the reason the federal government has introduced the Pooled Registered Pension Plans Act and financial institutions have been […]
Every day, almost 1,200 people turn 65 in Canada. That means that more than 400,000 Canadians, on average, will reach retirement age every year between now and 2030, according to Statistics Canada.